Dilbert's Scott Adams Has The Best Explanation Of Innovation In Silicon Valley Today That You'll Read

from the it's-all-psychology dept

Having spent nearly two decades in Silicon Valley, it's always interesting to see how different people try to understand or explain the innovative process that happens here. Remember last week's discussion on "disruptive innovation?" That's just a small part of the larger debate, often perpetrated by folks who have little sense of what's often going on in the startup and innovation world. So I find it interesting that after reading a bunch of opinions on that debate, a totally unrelated discussion hit home as being a hell of a lot more insightful and relevant to understanding a lot (though not all) of the innovation happening in Silicon Valley today, and it comes from Scott Adams, of Dilbert fame.

Adams, of course, is more than "just" a comic strip author, even if that's what he's most known for. He's started a few other businesses over time and is apparently hard at work on an internet startup. He also tends to post thought-provoking posts to his blog pretty frequently, even if he admits that much of the time he's just trolling to get responses out of people. Sometimes I strongly agree with him, and at other times, I vehemently disagree. But one of his recent posts on the nature of innovation in Silicon Valley is really worth reading.

It starts out by clearly setting itself up to mock the overused and overhyped concept among startups of the pivot -- a startup totally changing product direction after realizing its existing offering was unlikely to go anywhere. This concept has often been mocked (perhaps rightfully so) as highlighting entrepreneurs who either lack the courage of their conviction, or who are unwilling to put in the long slog of building a real business. But while Adams could take the easy mocking route, he actually provides a lot more insight into what's really happening, first highlighting how much of success in Silicon Valley is really due to luck.

The valley attracts some of the smartest humans on Earth, and each of those humans, being otherwise normal, probably assumed they could use their talent, brains, and hard work to achieve specific business goals, such as building product X and selling the company to Google for a billion dollars.

And then they find out that success in the start-up realm is mostly luck. They discover this by trying great ideas coupled with great execution and failing. And they further discover it by observing unexpected successes at other start-ups. Success simply can't be predicted to any level of statistical comfort.

Smart observers in the valley look for the "tell" that an early stage start-up will be a winner, but none can be found. Oh, sure, the team needs to be smart, talented, and willing to work long hours. But nearly every start-up has that going for it. Most have great ideas as well. None of it predicts success.

This is an exaggeration, of course. A skilled and ready team executing well is better situated to capitalize on good luck -- and there is a big variance in skills and execution among teams. But it is depressing how little people recognize or admit the role of luck in a successful startup. In my experience, first-time entrepreneurs who succeed take way too much credit for their own work. Those who struggled to build their business or who have a failure or two under their belts are much more willing to admit the role of luck (good or bad) in their eventual results.

But rather than taking this to the next expected place of laughing off the whole situation as an effort in being lucky, Adams points out that with the basic infrastructure of building a startup so commoditized, it changes the nature of innovation on the internet, such that it's no longer about a technological advantage or innovation, but about psychology:

In an environment in which start-up resources are not limited, and no one can predict the next winner, and it is easy to measure customer behavior in great detail, the Internet is no longer a technology.

The Internet is a psychology experiment.

Building a product for the Internet is now the easy part. Getting people to understand the product and use it is the hard part. And the only way to make the hard part work is by testing one psychological hypothesis after another.

Every entrepreneur is now a psychologist by trade. The ONLY thing that matters to success in our anything-is-buildable Internet world is psychology. How does the customer perceive this product? What causes someone to share? What makes virality happen? What makes something sticky?

And that's why you see so many companies "pivot." Because as a psychology experiment, it becomes clear that the early results aren't good, so it's time to try something else. Whether or not this seems exciting or depressing to you may depend on your perspective, but Adams isn't taking an opinion on the subject so much as describing what he's observing, and it seems fairly accurate in my experience.

There's one other bit of Adam's post that is worth highlighting, because it's something that people outside of the startup world almost never understand: the fact that while highly competitive, the level of "helping each other out" that goes on in Silicon Valley is quite incredible:

Another fascinating phenomenon in the valley is that every entrepreneur and investor seems genuinely interested in helping strangers succeed. I would go so far as to call it the defining feature of the start-up culture. Some of it has to do with the nature of entrepreneurs as serial problem-solvers. If you tell me what problem your start-up is experiencing, my reflex is to offer a suggestion or to connect you to someone who can help. And creating social capital makes a lot of sense when teams are fluid and who-you-know always matters. But beyond the practical and selfish benefits of being helpful, the dominant worldview in Silicon Valley is that if you aren't trying to make the world better, you're in the wrong line of work. The net effect is that the start-up culture is shockingly generous. If you need something for your start-up, folks will happily help you find it. I would have predicted the opposite.

Adams is not the only one who would have predicted the opposite. Time and time again, I hear outside observers believe that the startup world is very insular and only focused on their own goals. People frequently like to mock the "change the world" attitude of many entrepreneurs, finding it difficult to believe it's sincere or genuine, rather than pure marketing hype. And, sure, there are some carpetbaggers who don't believe it at all, but the degrees to which many in the Valley are legitimately trying to do amazing things and change the world is part of what's so inspiring in an age where cynicism and protectionism is so prevalent elsewhere.

We've talked in the past about all the research that shows how widespread information sharing and job hopping made Silicon Valley into the innovative center of the world, and this is just an extension of that. Rather than creating silos inside big firms, Silicon Valley has long been about sharing ideas among a wide group of people, which actually helps accelerate the pace of those "psychological experiments" to figure out what works, and what will actually build a better, more innovative product.

It's a really useful way of understanding Silicon Valley for those who haven't lived it.

Failure IS an option

Isn't the "pivot" something to be rewarded?

A few of the corporations I work with have begun to embrace organized, codified systems for innovation, rightly recognizing that simply hiring bright, offbeat talent is no guarantee that innovative ideas will spring from their metaphorical loins.

But in the polite, uber-civilized corporate world, they're finding they need to overcome two innate notions that threaten to dilute any attempt to innovate. First, you can't politely smile and nod and passively encourage harebrained ideas. They're using the phrase "constructive challenge" to signal it's OK to ask the tough questions... potentially disqualify a colleague's treasured brainchild. It's not personal.

Second, they're acknowledging, both socially and fiscally, that it's OK to fail. If, after lots of work -- design, testing, market research -- it's clear that they've missed the mark, or worse yet, that the marketplace has shifted, they're giving themselves permission to call it a flop, rather than bravely slog on with a broken concept. They sanction the loss of time and money, and acknowledge the role of an occasional failure in innovation. And if you can turn that into a pivot, why not?

So that's why the rest of us are cynical!

People frequently like to mock the "change the world" attitude of many entrepreneurs[...]

People mock their naivety and the silly things that get touted as "world changing". People mock the ridiculous way the attitude is expressed, when they make everything they say sound like a company PR prick.

People who don't bury their enthusiasm under management-speak don't get nearly the derision.

Brilliant!

Luck

But it is depressing how little people recognize or admit the role of luck in a successful startup.

Indeed. Succeeding in any given venture is at least 50% luck. It's possible to reduce that percentage, in a way, by arranging things to maximize the odds of a lucky strike (maximizing your industry contacts, keeping your mind open to unexpected opportunities, arranging things so that it's possible to take advantage of unexpected opportunities when the arrive, etc.)

However, I think there are two factors that encourage people to pretend that luck is an insignificant factor: ego and the need to instill confidence in the people you're working with (investors, vendors, employees, etc.).

Re: Luck

What you mean is have big heaping piles of money, that is the only determining factor in any venture. period without exception, also silicon valleys "innovation" is basically theft, all that money we gave to M$ and iApple should have just been given to Xerox we might have a stable mostly bug-less GUI operation system.

Another fascinating phenomenon in the valley is that every entrepreneur and investor seems genuinely interested in helping strangers succeed. I would go so far as to call it the defining feature of the start-up culture

Of course they are. There are many reasons here, not the least of which is getting the most chances to hit it rich yourself. Helping out early stage on a bunch of projects means you may be able to get into one of the winners and ride it to the top.

You may also be able to find people with good ideas or good skills but a dead project. They are ripe for the picking. You are helping them by helping yourself.

Understanding that Silicon Valley and many incubator nests are mostly about spraying as much shit at the wall as possible hoping for a hit. They don't need many hits to make a good living, you only have to have a small interest in each one to get rich.

Re:

Of course they are. There are many reasons here, not the least of which is getting the most chances to hit it rich yourself. Helping out early stage on a bunch of projects means you may be able to get into one of the winners and ride it to the top.

I have to admit that I've seen little to no evidence to support that claim at all. Much of the kind of "help" that I've seen doesn't work like that. There is little in the way of quid pro quo, and it's mostly just honestly people trying to help each other out.

Re: Re: Re:

Time and time again, I hear outside observers believe that the startup world is very insular and only focused on their own goals.

I have to wonder if this is because people don't see startups, they see large corporations that have grown out of or fed off startups and selfishness at some point becomes a defining feature of almost every corporation.

Using tracer bullets to find your solution

This idea of "pivoting" does remind me of the idea of "tracer bullets". This is from the Pragmatic Programmer--which is about software development.

But both concepts is about making adjustments midstream to accomplish your goals.

Also of note is the change in culture in "silicon valley". Like most places, it was about building a product you can sell to large numbers of people. Here, it is about developing an internet presence (okay, website) that attracts large numbers of people.

This matters as making substantial changes ("pivoting") is easier for your website...

Mass. Gov. wants to ban noncompetes - legislature balks

Massachusetts Gov. Patrick has proposed banning noncompetes in MA as discussed in the NY Times at http://goo.gl/hFBgIq .

Unfortunately large MA companies like EMC ( http://goo.gl/KnF8yc ) have so far held the upper hand in the MA Legislature over the concerns of employees, groups like IEEE, and the venture capiltal community. Without mentioning employees, the House Chair of the joint committee that cut the noncompete ban from the Gov's economic development bill told the Globe, "...he has heard from more companies that want to keep noncompete agreements in place than those that favor eliminating them." ( http://goo.gl/GGdbCd )

There's a committee hearing on July 1, 11am at the MA State House where residents can speak for 3 mins. each about the impact of noncompetes. See http://goo.gl/0n1V40 .

Besides California, noncompetes are unenforceable in India, and they require "reasonable compensation" in China.

Re: Mass. Gov. wants to ban noncompetes - legislature balks

> There's a committee hearing on July 1, 11am at the MA State House...

Written testimony is welcome from MA residents who can't attend the hearing as well as those who can. Email written testimony to Gale.Candaras and Thomas.McGee, both @masenate.gov; and to Joseph.Wagner and Ann-Margaret.Ferrante, both @mahouse.gov. Be sure to cc your state legislators who can be found via the NEVCA's page at http://nononcompete.co .

Twitter search: #noncompete OR #killnoncompetes OR #noncompetes OR #nononcompetes OR #keepnoncompetes

"Oh, sure, the team needs to be smart, talented, and willing to work long hours."

I don't think long hours are necessary at all. I've worked in big international companies and tiny startups. I've worked in projects where crunching was standard, and projects where it was the exception. Long hours were not a prerequisite for success. To the contrary, the most successful projects I've been a part of required little to no overtime.

In my experience, you get much better results from sticking to a sustainable development schedule and having your engineers produce consistent, high quality work rather than chasing an unrealistic ship date and having your engineers constantly crunching and producing minimum quality outputs so they can just shove the product out the door.

Re:

^ This

Long hours will get you a competitive advantage in getting the first version of the product out the door quicker... at the cost of slower subsequent development from the accumulation of technical debt meaning that you slowly lose your first-mover advantage to someone else who is working more sustainably (if such a competitor exists).

conflation

"Another fascinating phenomenon in the valley is that every entrepreneur and investor seems genuinely interested in helping strangers succeed"

No. They are genuinely interested in their own success. The success of strangers can pass as their success, but defining that success is up to them, not to the strangers. So while the success of strangers might well line up with their own success, conflating one with the other is incorrect. And if a startup can bamboozle strangers into thinking that they've succeeded, well, that's pure gold right there.

Pivot

"the pivot -- a startup totally changing product direction after realizing its existing offering was unlikely to go anywhere."

That is not the definition of a pivot. A pivot is only when of the 3 things: customer hypothesis, problem hypothesis, solution hypothesis, you change just 1 thing. An example is the zoom-in pivot, where the customer and problem where held constant, but Flickr zoom'd in just on photo sharing for gamers. A completely new business is not a pivot. I recommend you read Running Lean by Ash Maurya or Lean Analytics by Croll & Yoskovitz.